Can the Greek economy become "circular"? What needs to change, and what would be the benefits?
A research group of the Foundation for Economic & Industrial Research (IOBE) took over on behalf of diaNEOSis (a non-profit think-tank based in Athens, Greece) the drawing up a complete and detailed study for the necessary changes that must also occur in the Greek economy to this direction. In their multi-page report, they analyze the basic data, the institutional changes that have been implemented or launched, the country’s goals for the future and the major challenges that arise. The research report closes with an assessment of the benefit of a shift to a circular economy with terms of impact on GDP and creation of new jobs.
As the population of the planet grows and societies develop, the problem of managing available resources becomes more and more acute. Production activities and consumption now use very large amounts of material resources that are, by definition, finite, while the environment is also burdened by waste and process residues. It has emerged as an imperative worldwide, therefore, to implement transformations in the product production chain as well as in consumption, in order to make the entire economic activity more sustainable and less wasteful. The conversion, essentially, of the economy from linear to “circular”.
1. What is a "circular economy"?
All the products we buy and consume are produced through a specific process that always begins with the extraction/mining of some raw materials from the environment. These resources are sold, transferred, and converted into other forms through the processes of industrial production. After various stages, they arrive at the formation of the final product, which is consumed and, when its life cycle is complete, is thrown away, destroyed or recycled. Every object in front of you right now, from the screen you’re looking at and the chair you’re sitting in to the cup of coffee (and the coffee itself), goes through this process.
As we all know, today this is generally a wasteful process, not always rationally planned, which in many cases creates pressures and problems on the natural environment. That is why the discussion for a few decades has been intense about the transition from the above model to a more sustainable, more “circular” mode of operation of the economy.
But what is a “circular economy”? The term essentially describes an economic system based on the drastic reduction of waste produced by economic activity, by recycling/reusing a large part of the resources it uses. It comes to replace the “linear” model still widely used in which, as we described above, resources and raw materials are transformed into products that are distributed, consumed and, when they reach the end of their life cycle, discarded.
The “circular economy”, therefore, does not only include the recycling of waste at the last stage, but also interventions at all previous stages, for a more efficient use of raw materials and for extending the life of the product, with the final goal minimizing the waste of natural resources.
For example, the products of a circular economy must be designed from the outset so that they are easier to repair and do not need to be replaced (and thrown away) whenever they break. The production process itself, moreover, must be designed to reduce waste and reuse available resources. It’s not a simple thing at all.
What are the benefits? First of all, the limitation of waste (for financial as well as for ethical reasons). It is known that about a third of all food produced worldwide – 1.3 billion tons, worth 1 trillion dollars- ends up as waste or spoils due to poor transport and harvesting practices. At the same time, the reduction of waste reduces the pressures on the natural environment, and all the additional dramatic consequences (ecological, social and economic) that arise from them. There are, however, other benefits. A circular economy can protect businesses from contingencies such as supply chain problems, sudden changes in energy and raw material prices, or other factors that can affect economic activity. The adoption of the circular economy by the countries of the world is related to at least 7 of the 17 UN goals for sustainable development.
2. How much circular is the Greek economy?
In Greece, as a rule, we import a lot of things and export less. This is true for most things, but it is also true for materials used in industry and manufacturing. Most of the material resources that enter the Greek economy are imported from abroad. In all four categories in which the various materials are classified, Greece appears more dependent on imports than the European average.
Apart from imports, however, we differ from most European countries in terms of consumption. In Greece we consume less materials per capita than most EU countries: 9.8 tons each and every one of us on average in 2021, compared to 35 tons for every Finn in the same year. In fact, the amount of materials we consume has decreased by 34% in the last 20 years, mainly thanks to the dramatic reduction (almost 60%) of the consumption of fossil energy materials in the country during this time, with the transition to renewable energy sources that has been implemented in remarkable degree.
The waste produced today in Greece comes from various sources, some of which many are unaware of. For example, in 2018 most of the 45.6 million tons of solid waste generated in the country – almost half – came from mines and quarries. Other categories of waste include electric batteries, electrical and electronic devices, cars and other products, while the primary sector also produces a lot of waste (estimated at around 12.5 million tons in 2018 – of which 80% from livestock). According to 2015 estimates, we produce 142 kg of food waste per inhabitant every year – the most in the EU – while as a country we are fifth in terms of the percentage of the population that is in food insecurity.
A very important sub-category of solid waste is municipal solid waste (MSW) which includes household rubbish, but also rubbish from offices, shops and public organizations. Every Greek man and woman produces on average more than half a ton of such waste every year. As the chart shows, how much MSW we produce depends largely on how our economy is doing – however per capita we produce more than the European average.
What do we do with this waste? We bury them in landfills, almost all of them. 77.6% of MSW goes to landfill, the fourth highest rate in the EU. Only 19.9% goes to recycling or composting (compared to 48.5% in Germany and 32.5% in Sweden), while only 1 .3% are used for energy production.
Greece recycles around 60% of packaging waste (which goes in the blue bins), a percentage close to the EU average. We recycle almost all paper and metal packaging that is thrown away, but only 1/3 of plastic packaging and a smaller percentage of glass and wood packaging.
Any recycling is done mainly abroad. 55.6% of paper packaging thrown away in Greece is exported to third countries to be recycled. All the glass packaging that is thrown away, moreover, is recycled in Bulgaria, by a factory of Greek interests.
There are other structures that recycle or reuse materials. In Greece we have 143 approved car dealerships. A large percentage of the waste from excavations, constructions and demolitions (about 44%) is reused in other uses (embankments, paving of rural roads, etc.). An also large percentage, however, (unknown exactly how much) is discarded uncontrollably in the natural ecosystems.
All this leads to the result that the Greek economy is very far from being “circular”. In 2020 just 5.4% of material resources used by the economy came from recycled waste – compared to 12.8% in the EU, 21.6% in Italy and 30.9% in the Netherlands. How can this situation be changed? The usual ingredients of great change are needed: a robust institutional framework and a wealth of tools, financial and otherwise.
3. The tools and framework
The current Circular Economy Action Plan, presented by the European Union in 2020, as well as a series of directives, proposals and decisions describing how member states should manage different categories of waste, form the basic institutional framework on which the member states develop the individual relevant strategies. The EU in these texts sets ambitious targets in various areas, such as for the horizontal recycling of municipal solid waste for 2025 (55%) and 2030 (60%) and for limiting landfill to 10% of managed waste by 2035.
In Greece, which is certainly far from these goals, the institutional framework includes texts such as the new Action Plan for the Circular Economy (2021), the National Plan for Waste Management (2020), the National Waste Prevention Program (2021), but also the National Climate Law (2022). All these policy texts essentially describe the compliance of Greek legislation with European directives and are considered sufficient and complete.
Today, there is also a wide variety of tools (technological and other) at every stage of the production process, from waste collection-sorting and mechanical or biological treatment with various techniques and methods in special facilities, to financial incentives for the waste reduction and more effective waste management.
But only strategic plans and techniques and methods are not enough: money is also needed. The National Waste Management Plan mentioned above describes the need for investments of between €3 and €3.5 billion, which include the construction of special Waste Treatment Units (at a cost of approximately €1.1 billion), waste energy utilization units (another €1 billion or so) and other costs for studies, landfills, bio-waste processing units, etc.
Some first projects have already been launched, such as the Waste Treatment Unit of the Attica Circular Economy Central Park, the corresponding “Park” in Piraeus, two Waste Treatment Units in Chios and Kefalonia, but also private projects for the production of plastic packaging, for waste management of Tilos, etc. Much more investment is needed, however. Fortunately, from what it seems, funds to finance them exist. The research describes the available potential sources of funding for these projects, such as the new NSRF 2021-2027 (with a total budget of €3.61 billion in the corresponding axis), the resources foreseen for the National Recovery and Resilience Plan ( known as “Greece 2.0”), from the national budget and (mainly) from the Recovery Fund, the National Development Program of the five-year period 2021-2025, the Green Fund, the European Investment Bank and various sectoral European programs.
But if the institutional framework, the technical tools and the funding sources are there, why don’t we already have a “circular economy”? What needs to be done to move forward?
4. The problem and solutions
As stated in the research, in terms of our transition to a circular economy “the main problems in the country are administrative barriers and consumer behavior”. There are financial and legislative obstacles for the relevant investments, there are difficulties and delays in the location of the infrastructures, but there are also objective geographical or technological obstacles.
Besides, there are quite big problems and deficiencies in the recording and collection of data – and if we don’t know how much and what kind of waste we have, there is no way to implement planning for its collection and recycling. As mentioned in the research, today the recording is very problematic, mainly for some types of waste – data on food waste, for example, is expected at the end of 2022 while in other categories the data is a year or two behind.
In the report we can read a summary of all the policy proposals that the researchers come up with. They include a series of critical and necessary interventions, from the implementation of a more efficient methodology for recording waste and the utilization of the electronic waste register, to the implementation of interventions to better monitor the transition, which is currently incomplete and due to the absence of data.
Extensive reference is also made to the application of financial incentives and the adoption of (more expensive) technological solutions for solid waste management by businesses and the adoption of the landfill fee for waste, which should reflect the real environmental cost of waste burial . “The aim”, write the researchers, “is to turn burial into an ‘expensive’ solution for waste management, forcing the entities that manage it to look for other solutions”.
In addition, the researchers put a lot of emphasis on information and education actions for consumers, schools and companies, – that “circular economy” is not only garbage. It is food management, how we buy, rent and use products. Such actions are critical, among other things, to curb the backlash that often occurs in local communities that prevent or delay investment. The National Waste Management Plan envisages increasing the number of Waste Treatment Units in Greece to 38 by the end of 2023, but many local communities are reacting. Without these infrastructures, there can be no circular economy in Greece.
5. The benefit of a circular economy
In Greece in 2019 the sectors connected to the circular economy created €735 million of added value in the Greek economy, an amount corresponding to almost 0.4% of the GDP in the same year, while they employed approximately 68 thousand workers. And this, without mentioning the role of local authorities in a large part of the relevant activity (waste collection). These are the figures in an economy that is minimally “circular”. What if the plans contained in the strategic plans were implemented? The researchers formulate a number of different scenarios, and assess the impact of each on the country’s economy.
They calculated that if they can really invest, for example, in the amount of €2.4 billion for the construction of new recycling and material processing units in the country, as described in the National Waste Management Plan, in a ten-year horizon the impact on GDP will reach €1.1 billion, while in terms of employment, the major impact is estimated at around 4.6 thousand jobs per year, stable over an eight-year horizon. In the same period, the additional revenues of the State from taxes and contributions that reach 390 million.
However, the transition to a circular economy can only be positive under certain conditions. If the needs of a Greek circular economy for secondary raw materials are covered exclusively or almost exclusively by recycling, then the impact can be positive on GDP (by €70 million per year until 2030, according to the best scenario), creating dozens of thousands of jobs (44,000 in the same scenario). But this is not the only realistic scenario. Greek companies in the manufacturing sector must also comply with European targets and will be forced to recycle secondary material resources in the future. If the necessary investments are not made in the country and these requirements of the economy are covered only or mainly by imports, then the transition to a circular economy will have negative effects on the economy. According to the calculations of the researchers, in this scenario we will have a loss of jobs (19,000 according to the worst scenario) but also a contraction of the GDP of the order of €220 million per year.